Regina-based Viterra, the grain handling arm of multinational commodity firm Glencore, on Tuesday announced a supply and marketing deal with Pacific Coast Canola (PCC), a next-to-new crush plant at Warden, Wash., about 160 km southwest of Spokane.

PCC until now has been majority-owned by Winnipeg special crops processor Legumex Walker, which recently sold its special crops business to U.S. grain firm The Scoular Co. and began winding down its operations.

In court documents filed Monday, Legumex’s liquidators, Toronto-based KSV Advisory, described PCC — whose main lenders in July called in the crusher’s US$54.6 million senior credit facility — as being in a “distressed financial position.”

Legumex had thus negotiated a deal to shed its 84 per cent stake in PCC for “no cash consideration,” KSV said, other than to be granted a release from PCC’s main secured lenders and lien registrant.

Glencore — whose Glencore Grain Investment arm had already owned the remaining 16 per cent of PCC from the outset — boosts its stake to 50 per cent.

Seattle construction, design and property management firm McKinstry, which was a mechanical and electrical contractor on the construction of the Warden plant, will take up the remaining 50 per cent of PCC in a “limited liability operating agreement” with Glencore.

McKinstry, in return, has released its lien on the crush plant, Legumex said in a separate release Tuesday. AgCountry Farm Credit Services, as the representative for PCC’s lenders, agreed to repayment terms for its credit facility, which has now been “repaid and terminated,” Legumex added.

PCC, which opened at Warden in 2013 and had previously dealt with Scoular for its canola supply, is billed as the largest expeller-press canola processing facility in North America, with crush capacity for 1,100 tonnes of canola per day.

The company’s product lines include non-GMO, Halal- and Kosher-certified oils, plus canola meal as feed for dairy cattle and other livestock.

“We look forward to helping PCC achieve its full potential, through delivery of consistent seed supply, expansion of our existing relationships with thousands of canola producers to include local PCC market producers, our focus on continuous improvement, and connections with domestic and international end-users,” Viterra’s CEO for North America, Kyle Jeworski, said in a release Tuesday.

Viterra in recent years has snapped up a pair of Canadian oilseed crush plants, including the former Canadian Agra cold-press canola plant at Ste. Agathe, south of Winnipeg, and, in late 2015, the former TRT-ETGO canola and soybean crushing and refining plant at Becancour, Que., near Trois-Rivieres.

Tuesday’s deal also effectively shuts the book on Legumex Walker, which was created in 2011 from the merger of two family-owned Prairie companies, Tisdale, Sask.-based Walker Seeds and Roy Legumex of St. Jean Baptiste, Man.

The two companies had brought their special crop processing assets and the plan for the PCC plant into the new firm, which later expanded to take in Canada’s biggest sunflower processor, Keystone Grain of Winkler, Man., and stakes in the U.S. dry bean and sunflower seed markets, with deals for St. Hilaire Seed Co. and the sunflower processing assets of Anderson Seed Co.

Legumex, which in March announced it would explore “strategic alternatives” to “maximize shareholder value,” changed its legal name to LWP Capital after completing the sale of its special crops arm to Scoular in November.

The company in November said it expected to have $1.69 to $1.98 per share available for distribution to shareholders after taxes and other expenses were paid down.

LWP said Tuesday it has formally adopted its liquidation and dissolution plan, its shares were delisted from the TSX effective last Thursday and it “no longer carries on as an active business.” — AGCanada.com Network

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Winnipeg-based Legumex reported Monday that shareholders representing just over 76 per cent of its stock have voted 99.6 per cent in favour of selling the company’s special crops division to the Scoular Co.

Participating shareholders also voted 89.7 per cent in favour of the company’s voluntary liquidation and dissolution, as per the deal announced in September and the proposal laid out by company management Oct. 15.

All necessary federal and provincial regulatory approvals are in place for the sale to Scoular, Legumex said Monday in a release. The special crops assets include plants in Western Canada, the U.S. and China.

The deal, worth $174.6 million ($94 million plus net working capital) is now expected to close by Nov. 30, pending other third-party approvals and other closing conditions, the company said.

Legumex said in a separate statement Oct. 26 it “continues to make progress” toward a sale of its other major asset, an 84 per cent stake in the Pacific Coast Canola (PCC) crush plant in Washington state.

An agreement in principle is in place with the plant’s unnamed “prospective acquirers,” Legumex said, subject to approval from PCC’s secured lenders.

If a deal closes successfully, one of the closing conditions will be the termination of PCC’s supply and marketing agreement with Scoular, under which the U.S. company was to source canola for the plant and market its output.

Legumex said it “does not expect to receive any value” from the sale of its stake in PCC.

Publicly-traded Legumex also said Oct. 26 its distribution guidance from its asset sale and liquidation will depend partly on whether the company is on the hook for $1.2 million in severance obligations at PCC and/or for a US$1.5 million payment to Scoular stemming from the end of the PCC supply and marketing agreement.

Legumex Walker was created in 2011 from the merger of two family-owned Prairie companies, Tisdale, Sask.-based Walker Seeds and Roy Legumex of St. Jean Baptiste, Man., bringing their special crop processing assets and the plan for the PCC plant into the new firm.

Its later expansions included Canada’s biggest sunflower processor, Keystone Grain of Winkler, Man., and stakes in the U.S. dry bean and sunflower seed markets with deals for St. Hilaire Seed Co. and the sunflower processing assets of Anderson Seed Co. — AGCanada.com Network

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Winnipeg-based Legumex plans to sell its special crops division, which includes 14 plants in Canada, the U.S. and China, to private U.S. grain-marketing company Scoular for $94 million. Including Legumex’s working capital, the deal is valued at $174.6 million.

Legumex also said it is negotiating the sale of its 84 per cent interest in Pacific Coast Canola (PCC), a crushing plant in Washington state. Glencore PLC owns the rest.

Legumex shares (TSX:LWP) rose 140 per cent to $2.16 on Monday in Toronto.

In July, Legumex said PCC had defaulted on a $54.6 million loan. The company was hampered in 2014 by railway congestion limiting delivery of canola seed, and more recently weak industry margins and plunging crude and soyoil prices.

“It’s really been difficult and that’s why all the independent canola crushers have sold,” Legumex CEO Joel Horn said in an interview. “None of the independents were able to survive pretty amazing macroeconomic events.”

Two other canola crushing plants, Felda’s TRT-ETGO facility in Quebec and Pico Holdings’ Northstar plant in Minnesota, were sold this year to Glencore’s agriculture segment Viterra and to CHS Inc. respectively.

Potential buyers for Legumex’s canola plant are Glencore and U.S.-based oilseeds crusher Archer Daniels Midland, Cormark analyst Marc Robinson said in a note.

Those are “two good guesses,” Horn said, but declined to identify the company Legumex is talking with.

Once the processing plants are sold, Legumex will wind down operations and expects to pay its investors $2.50-$2.75 per share. It will then cease trading on the TSX.

Scoular chief operating officer Bob Ludington said in a statement that the acquisitions will expand its U.S.-based grain-handling network, allowing it to sell to more crop buyers globally.

“We expect to operate Scoular Special Crops much like (Legumex) operates the business today, but with the financial capacity to expand operations, product lines, and distribution channels.”

Legumex Walker formed in 2011 as a merger of two family-owned Prairie companies, Tisdale, Sask.-based Walker Seeds and Roy Legumex of St. Jean Baptiste, Man. Both brought their special crop processing assets and the plan for the PCC plant into the publicly traded firm.

Legumex in 2012 bought Canada’s biggest sunflower processor, Keystone Grain of Winkler, Man., and bought stakes in the U.S. dry bean and sunflower seed markets with deals for St. Hilaire Seed Co. and the sunflower processing assets of Anderson Seed Co.

Legumex said in March it would review its “strategic and financial alternatives” for “maximizing shareholder value” — an announcement to which Legumex shares responded at the time by jumping above $3.

The deal with Scoular — which last year signed a separate deal with Legumex to source canola for the PCC plant and market its oil and meal output — still needs approval from Legumex’s shareholders at a special meeting on Nov. 9.

Legumex’s senior officers and directors and members of Roy Legumex’s founding Sabourin family, who together hold about 15.5 per cent of Legumex Walker, have all committed their stakes to the deal.

The deal, Legumex said Monday, will also be subject to federal approval under the Competition Act and provincial approvals as per Manitoba’s Farm Lands Ownership Act and Saskatchewan’s Farm Security Act.

— Rod Nickel is a Reuters correspondent covering the agriculture and mining sectors from Winnipeg. Includes files from AGCanada.com Network staff.

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Pacific Coast Canola, a cold-press canola crushing operation at Warden, Wash., about 160 km southwest of Spokane, is 84 per cent owned by TSX-traded, Winnipeg-based Legumex, and 16 per cent owned by commodity giant Glencore.

Legumex announced Friday that PCC has been served notice for demand of repayment of “all amounts due” under its senior credit facility — a total bill estimated at US$54.6 million.

The notice, citing PCC’s default on the terms of the facility, came from Fargo, N.D.-based AgCountry Farm Credit Services, as the agent for the lenders involved.

PCC was in “active discussions” with AgCountry and is “considering various alternatives,” Legumex said Friday.

The credit facility in question is secured by a first lien on “all assets and undertaking” of PCC, but Legumex said it’s not yet aware what actions AgCountry plans to take.

PCC hasn’t got access to funds to repay the loan in full, Legumex said, and if it can’t refinance the loan, the crusher “will cease its operations” and “would no longer have any equity value.”

Legumex emphasized Friday that PCC’s credit facility isn’t guaranteed by the Winnipeg parent firm or any other Legumex arm. However, Legumex said it recently provided PCC with a US$2 million letter of credit, which it expected AgCountry will draw down.

Legumex also said it doesn’t expect PCC’s default or AgCountry’s demand to affect the parent’s pulse and special crops processing arm, which runs facilities in Manitoba, Saskatchewan, North Dakota, Minnesota and China.

PCC has been a project of Legumex Walker’s since it formed in 2011 from the merger of Saskatchewan’s Walker Seeds and Manitoba’s Roy Legumex. Billed as North America’s largest expeller-pressed canola plant, PCC was built with capacity to crush up to 380,000 tonnes of canola per year.

Getting canola in the U.S. northwest during North America-wide rail congestion later became a problem for the plant, though in fiscal 2014, PCC boosted its full-year crush by 83 per cent from 2013 levels, to 242,300 tonnes.

PCC last year also entered a strategic alliance with grain firm Scoular Co., in which the Omaha company would source canola for PCC and market PCC’s canola oil and meal.

Legumex CEO Joel Horn said in March that PCC is “working to significantly improve its financial performance, when additional non-GMO and local canola seed should be available with the new crop in September.”

Legumex, in a separate release Tuesday, said PCC’s issues won’t affect the parent company’s strategic review, which its board launched in March to “identify and consider strategic and financial alternatives.”

Such possibilities, the company said at the time, could include “strategic financing” from outside investors, a “business combination” such as a merger, or the sale of the company, whole or in parts.

The board’s special review committee “expects to provide an update in the coming weeks as the process nears its completion,” Legumex said Tuesday, but emphasized there’s “no certainty that any transaction or alternative will be undertaken” coming out of the review. — AGCanada.com Network

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The publicly-traded Winnipeg company said Monday its board of directors has set up a review committee to “identify and consider strategic and financial alternatives… with the ultimate goal of maximizing shareholder value.”

Such possibilities, the company said, could include “strategic financing” from outside investors, a “business combination” such as a merger, or the sale of the company, whole or in parts.

Legumex said its board and management believe the value of its shares (TSX:LWP) has “not been reflective of the fundamental value inherent in the company” — and that such a review is timely given its recent “strategic shift to the high-value specialty food ingredient market.”

Legumex shares by Monday afternoon had jumped about 40 cents from Friday, peaking at $3.21 then settling slightly to $3.12.

That “strategic shift” has included expanding its high-oleic Omega-9 canola oil program with Dow AgroSciences Canada, and its non-GMO canola oil and meal programs with Scoular Co., CEO Joel Horn said in a release.

The review follows expressions of interest from “a number of qualified parties,” Legumex chairman Bruce Scherr, who will chair the review committee, said in the same release.

Those parties, he said, “are interested in exploring various transactions with us in certain of our markets, including the specialty food ingredient market, and we expect that this process will unlock (Legumex’s) value and allow the company to fully capitalize on these opportunities.”

Further “higher-margin” products from canola and special crops are involved in Legumex’s talks with potential partners, Horn said.

“No certainty”

Formed in 2011 as a merger of Saskatchewan’s Walker Seeds with Manitoba’s Roy Legumex, the company’s assets today include 12 crop processing and packing plants in Manitoba, Saskatchewan and Minnesota and two in China, plus receiving stations in Manitoba, North Dakota and Minnesota.

It also holds an 84 per cent stake in Pacific Coast Canola, a U.S. cold-press canola processing facility at Warden, Wash., which opened in 2013 with crush capacity for over 350,000 tonnes of canola seed per year.

Legumex, in its release, stressed there’s still “no certainty” any deal, merger or takeover will come out of the review process, and no decision on any option has yet been reached. It also said the committee hasn’t set a “definitive schedule” to complete its review.

Robert Buetel, president of Toronto investment holding company Oakwest Corp., and Marty Thrasher, president of London, Ont.-based advisory firm FMT Consulting, have both resigned from Legumex’s board, the company said Monday.

Legumex on Monday also announced a promotion for its corporate controller, Rosemary Brisson, to chief financial officer.

Brisson replaces CWB director and ex-Viterra CFO David Carefoot, who left Legumex in November to become CFO for Winnipeg-based retail chain Princess Auto. — AGCanada.com Network

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